Law:

Section:

Section 148, read with section 147, of the Income-tax Act, 1961 – Income escaping assessment – Issue of notice for – Assessment year 1965-66 – Whether admission of fundamental or primary fact cannot be withdrawn and fresh litigation cannot be started with view to obtain another assessment upon different assumption of facts – Held, yes – Whether where while assessing total income of assessee revenue had allowed an amount under head ‘workmen and staff welfare, expenses, merely because vouchers were not filed at time of original assessment and similar expenditure was disallowed in succeeding assessment years, revenue could not remedy error by notice under sections 147 and 148 – Held, yes FACTS The assessee-company in their return for the relevant assessment year, disclosed the profit and loss account, the balance-sheet and other necessary particulars. The ITO, thereupon, determined the total income and assessed same after having allowed an amount under the head 'workmen and staff welfare expenses'. The ITO subsequently issued notice to the assessee under section 148 contending that the deduction allowed under the head 'workmen and staff welfare expenses' resulted 'in the escape of tax' and, therefore, under section 147 directed the assessee to submit the 'return'. The Commissioner endorsed 'yes' indicating his satisfaction of the reasons recorded by the ITO. In the instant writ petition, the alleged that the Commissioner indicated his satisfaction "mechanically" and such a satisfaction was, "mere pretence"; that the notice of the ITO was the result of "change of opinion" of the succeeding ITO, with a view to revise the assessment and, therefore, the impugned notice should be quashed. However, the Commissioner stated that the assessee did not bring to the notice of the ITO at the time of assessment that staff welfare expenses include lump sum amount spent by its vice-president as per his discretion, that the expenditure was not incidental to business and that the claim for similar expenditure by the assessee was disallowed in the orders of assessment in earlier assessment years. HELD The admission of a fundamental fact or primary fact cannot be withdrawn and a…

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